(April 2): During the Covid-19 pandemic, small and medium enterprises (SMEs), being the backbone of economies, are most vulnerable to the financial impact and it is important that the government extends to them a helping hand.

The second economic stimulus package announced by Malaysia pales in comparison to those announced by countries like Singapore, Thailand, Australia, Canada and the UK.

Many of these countries provide financial assistance to SMEs and in the case of Canada, the wage subsidy will be backdated to March 15, plus they get one-year interest-free loans to cover their wage costs to ensure no lay-off of workers.

In Malaysia’s case, I am mystified over the one-off payment of RM500 to civil servants when their wages are already guaranteed by the government.

The wage subsidy of RM600 per month for three months for those employed in the private sector is of little help considering the many stringent conditions attached to it. Besides, many of the key employees earn above RM4,000, hence they do not qualify.

Furthermore, for many of the young start-ups, how then can they prove that their earnings have been reduced by 50% when they may have just started some months back with heavy financial commitments?

I would have thought this wage subsidy of RM600 per month should be across the board for all employees and be extended to at least the end of the year, bearing in mind that businesses can only pick up over the next six to nine months, and without any of these stringent conditions attached to it.

So far, the measures provided by the Malaysian government may not be enough for the survival of the SMEs.

The deferred contribution for Employees Provident Fund and Human Resources Development Fund levy for six months which the SMEs need to pay later is only a temporary measure. Again, this amounts to some RM6 billion out of the RM250 billion.

Interestingly, the bank loan moratorium proposal forms RM100 billion of the RM250 billion! This moratorium is given to businesses to borrow more money to pay for expenses, so how does it qualify to be a subsidy from the government’s coffer?

During the movement control order (MCO) period, many of the SMEs are not able to operate while expenses continue to run. It’s just like a parking meter, it never stops!

Why are there no definitive measures rolled out for SMEs to save jobs?

Many of us are sympathetic towards the deprived and the B40 community but this second economic stimulus package is very much skewed towards taking care of them but leave behind the SMEs. Why?

To urgently address what has not already been done, I want to proposed the following:

1. EPF contribution waiver effective March 2020
Instead of “Payment Deferment Options”, what the SMEs need right now is for the government to waive EPF contributions for at least six months effective March 2020, bearing in mind that this waiver is of no cost to the government.

If possible, waiver of all statutory payments like SOCSO, EIS and SST for a limited period of say six months effective March 2020.

2. Subsidies for wages
In addition to the waiver of EPF contributions, some forms of subsidy for wages for at least three months. Alternatively, allow employers and employees to mutually agree to pay cuts in order to keep their jobs. Under this crucial time, each and every one needs to play a part to make sacrifices.

3. Reduction in income tax
The tax authority is one of the biggest stakeholders in our businesses and yet, in difficult times like now, why are we not extended a helping hand?

To help the SMEs, please reduce the income tax rate by at least 30% for Year of Assessment 2019 & Year of Assessment 2020 and allow for the past one year’s profits tax to be retained to assist with cash flows.

Allow revision of tax estimate, CP204 to a lower tax amount instead of the maximum revision of no less than 85% of previous year’s tax.

4. Government financial cash aid is urgently needed
The retail industry needs a direct injection of cash flow and this is where we are advocating that the government needs to a “cash rescue fund” for Covid-19 casualties immediately.

Datuk Seri Raymond Liew is managing partner at McMillan Woods.

#dudukrumahdiamdiam. We will deliver the news to you at theedgemarkets.com.